The Hindu Business Line : TN levies infrastructure charge on builders

Chennai, Jan. 13 Builders in Tamil Nadu will now have to fork out an infrastructure and basic amenities charge, with the Tamil Nadu Housing and Urban Development Department coming out with an order to this effect.

The Government Order dated January 4, 2008, under the Tamil Nadu Town and Country Planning Act (1971), levies a charge of between Rs 200 and Rs 1,000 a sq m depending on the category of the building. Non-FSI (floor space index) and parking areas will be excluded from the levy.

The Order clarifies that half the amount will be collected when a final decision is taken on planning permission and a bank guarantee has to be given for the balance, which can be paid in two equal instalments.

Similar order

The first instalment has to be paid within six months of the planning permission being issued and the second within the next one year or before the issue of a completion certificate, whichever is earlier.

According to builders, last June the State Government had issued an order to this effect but the builders had gone to Court and obtained a stay on it on the grounds that the Town and Country Planning Act did not provide for the levy of such charges.

Subsequently, the State Government amended the Act appropriately.

The petitions were dismissed on January 2, 2008.

Current charges

The charges are now being levied on four categories of buildings and the rates are: commercial and IT buildings at Rs 500 a sq m; multi-storey buildings at Rs 1,000 a sq m; institutions at Rs 200 a sq m; and industrial use at Rs 300 a sq m.

In Chennai, the Chennai Metropolitan Development Authority will be collecting the charge and in other areas the local authorities and planning authorities will collect it.

Meanwhile, the builders have requested the Government to bring down the rates. They say that the charges would add about Rs 18 to Rs 90 to the sq foot cost.

With most major constructions — primarily multi-storey and commercial buildings — involving several lakh square feet of area, the additional costs would be huge.

This, in turn, would have to be transferred to the end consumer.

In the first year alone, builders say that the Chennai Metropolitan Development Authority is set to rake in at least Rs 500 crore.

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